We tend to cringe whenever the U.S. Treasury Department announces that it must borrow more than it had expected, since it only means that the U.S. government is adding to its already massive debt problems. Yet its announcement that it expected to borrow “only” $617 billion during the 4thquarter of 2020, considerably less than the $1.22 trillion they estimated earlier, is anything but good news. Nor is the government’s recent announcement that it would require about $1.1 trillion less than had been expected …
The 3rd Quarter GDP Report
November 1, 2020On Thursday, the Commerce Department announced that U.S. GDP had grown 7.4 percent in the 3rd quarter of 2020, which amounts to 33.1 percent at an annualized rate. The White House did not hesitate to trumpet the news, calling it the Great American Recovery. To call such an account hyperbole would be an understatement. Not only is it very far from “great,” calling it “a recovery” is also highly questionable (we must, however, concede that it is American). It is …
David Graeber: A True Public Intellectual
September 25, 2020Progressives the world over are mourning the tragic and untimely death of anthropologist David Graeber. He was one of the few academics who truly “walked the talk,” blending his activism and anarchism with original and pathbreaking research. Graeber is possibly best known for his involvement with Occupy Wall Street (he is frequently credited with coining the term “the 99%”) and his controversial dismissal from Yale University. I did not know him personally but am familiar with some of his professional work, …
In Defense of Idleness
September 11, 2020Modern society’s belief in the virtue of industry, productivity, or plain hard work is well ingrained in our psyche, and far predates capitalism. According to an old Arabian proverb, “the devil tempts all men, but idle men tempt the devil.” Ouch! If in any way representative of our opinion of human inactivity, it should hardly surprise that no sooner than Covid-19 forced idleness upon us all, we heard a chorus of voices keen to return to the status quo. But from …
The Free Competitive Market as Red Herring
August 28, 2020I like to ask my economics students whether competitive free markets are a good thing. Despite the fact that many of them want to go into business as a career, they mostly agree that competition and free markets are universally desirable. I try to remind them that absence of competition is what most helps businesses stay alive – never mind rake in abnormal profits – but they are not easily persuaded. Further discussion with them reveals a widespread and ingrained …
The Great Divergence: The Economy and the Stock Market
July 17, 2020Our economy presently faces by far the greatest collapse in the lifetime of most people alive today. Indeed, long after the Covid-19 scare passes, we are likely to remain mired in a high unemployment trap for an extended period. The U.S. economy has lost over 40 million jobs in the past four months, even if several million have been temporarily recovered as a result of the federal government’s Paycheck Protection Plan. Consumption fell by record amounts in April and May …
Economic Depression and the Liquidity Trap
July 3, 2020I never quite got the liquidity trap when I was in college. Not having grown up during a major war or an economic depression, the concept always seemed kind of abstract. I understood it a bit better when I was in graduate school, probably because by then I had greater general curiosity about economics. But even then, it was not easy to fathom without direct observation or experience. Things change. The past 10-12 years are, arguably, Exhibit A. According to …
What the Unemployment Rate Conceals
June 19, 2020A couple of weeks ago the Bureau of Labor Statistics (BLS) reported the May unemployment rate at 13.3 percent. In normal times, such a number would be considered alarmingly high. But we are not in normal times. And compared the 14.7 percent rate for the preceding month, many – not the least President Trump – took the announcement as good news. Unfortunately, there are a number of factors underneath this single statistic that should give us pause. First, there are …